Gold Market Commentary: Buyer Of 2,000 December 1,800 Calls Emerges

SummaryApril Gold settled at $1343.00 per 100 troy ounces, a gain of $5.80 for the day, after swinging from $8.00 up to $7.00 down and back. Volatility was unchanged in the backs and lower in the fronts. Call Skew and Call Tails increased.

Analysis: Skew firmed up today with calls being bought in December and August. Puts were sold in April, June, August and October. Volatility was roughly unchanged on the day but there is a definite change in tenor in risk reversal trading. This was in large part a reaction to a fund buying December 1800 Cs live, approx. 2000 times. Moving forward, nothing about today’s action gives a directional hint except that December calls are being bought once again.

Commentary: The market opened very strong and then washed out, looking like a trend day lower. The bounce through unchanged came on the back of the December call buying. Our guess is that call buyer was also positioning himself in futures. Whether he’s right or not, we don’t know. Right now we are sticking to our guns and don’t expect to see volatility pop until we settle above 1346 or below 1325.

Skew firmed up today with calls being bought in December and August. Puts were sold in April, June, August and October.

Help me out here, please. Didn't somebody (other than the exchange) take the other side of these trades? Couldn't one also say, "Skew firmed up today with calls being sold in December and August. Puts were bought in April, June, August and October.

Disclosure statement: I am not a metals options trader, only a horse trader.

watcher there are snow related futures/options trading on the CME = In you guessed it ! (snow accumulation derivatives) !? Huh ?

"But there is a market to trade derivatives tied to snowfall amounts"

Since last winter, the company that owns the Chicago Mercantile Exchange has offered a market for businesses and investors to trade futures and options — they also are known as derivatives — tied to the amount of snow that falls during a set time span.

Tim Andriesen of CME Group, which also runs other weather-based markets, said the snow-based derivatives have not tended to attract thrill-seeking gamblers looking to put a bet on something unpredictable — Mother Nature's roulette wheel.

Bwah ha ha ha ha! That is exactly what I think when I see someone driving a LR/RR. That and that wealth does not equal car-choosing smarts... (LR/RR are some of the biggest POS cars on the road. If I had a gold eagle for every day one of my clients LR/RR was in the shop for mechanical or computer problems I would be at home with a Sheen-like brick of coke critiquing porn.)

Dollars work on magic. The M2 is simply derived from price of gold. There are far far more dollars than M2 signals there are due to manipulation of price of gold which is really just manipulation of people's willingness to use it as money or percieve what it really is.

It's like having a disk duplicator store twice as much data on one disk. Only the dollar stores twice to 3 times as much wealth in each dollar.

When comex busts or slows deliver down to rediculous untennable permanent backwardation. The wealth duplicator loses it's compression and it projectile vomits all over everyone.

We go from bank closings rising at rapid pace to government closings rising at rapid pace. It all passes through people as a power rush euphoria so it lulls down at each big event. I think though India is set for market crash and revolution. Canada like america is building up a big volcanic event. The outliers have to blow and stabilize or else if they don't when america blows it will just be one big giant pool of blood and brains smeared all over the concrete.

Sideways just won't happen unless it's a timing event to reduce damage. This is all controlled sort of by pluto in capricorn. So saturn timing will schedule when the changes occur as everyone revolutionizes what government really is and how it really works. Timing has been done quite a bit and will be done quite a bit this year but it will be much more rapid and pulsy. So you can view it as sort of sideways if you think about an earthquake shaking back and forth. How awfull it get's just being defined by how much resistance government wants to generate. Things are pretty good right now but stressors are rising.

Wow, a gold thread and yet I hardly understand ANYTHING of most of the above! Below I can understand.

Fortunately Bearings are never accused of being brainy, kind of the opposite actually. But, Bearings don't trade either, so they don't understand professional trader jargon. Bearings just roll when they're pushed, that's about it...

If this guy hedged his long calls by selling futures (as the article suggests saying that the guy posititoned himself in the futures), then this isn't really a bullish bet. this position has a much greater chance of making money to the downside (as he could buy his futures back cheaper, plus vol would spike to the downside, plus the curve would flatten and raise calls relative to puts). If the futures rallied to 1800 (and he is hedged, which I'd bet he is), then he'll lose on those futures all the way up to 1800, and while he'll make on the calls, it won't be enough for a long time. The vol will come in hard, and the curve will steepen and make call values go down and puts will increase in value. Buying those calls looks bullish, but unless we know that he's not short futures(and on what delta), we can't really say where his position makes money. But if he's hedged, it makes much more, much quicker to the downside.

Due to fires,floods etc, Russia (Egypt's biggest supplier) has cancelled all exports and a 600,000 ton order for Sept deliver has been deep sixed. How is Egypt going to feed its 81 million people (with one fastest population growth rates in the world at3% per year) without an exporter or foreign reserve funds.

I see QE3 coming to save the Egyptian people and drive the price of oil to $100/bbl rice up limit, corn up limit and wheat back to all time highs.

America is the only exporter of wheat at this time and new aid tied to new orders are likely.

Reuters says the present storm will cause damage to US wheat and cattle markets. Oklahoma and Texas with 10 to 12 degrees and gusts up to 30mph will kill a lot of cattle. I expect to loose 10 to 15 percent of my herd this week. Expect beef and wheat to go up. That may impact our exports.

Buy some fat cigars or a pack of your favorite cigarettes (go ahead, you are going to die anyway).

Buy some gold and silver coinage; buy in $599 or less increments if in U.S. (to avoid that pesky ten ninety nine) and lay it on the bed; a candle burning in a sconce, champagne, and a dozen roses off to the side (NOT on the bed, you might regret those stems there).

Give her the fever.

If all else fails, twenty years from now when you kick the bucket and she opens the safe deposit box that tangible insurance and presence/memory will be worth every penny.

I'm at about 40% total dollar shorts and holding; it is GTU, PHYS, CEF, FXF, FXC, HL, NEM, SLW, DBA, MOO, stuff like that, of course some physical. The balance is cash. No leverage. The speed with which it moves when PMs move is positively bracing, but I am at peace. Sometimes it moves by a month's income in a day. Waiting for some more Fed-induced "wealth effect," which I am confident is coming. Still also expecting one good final deflationary sag before Ben "goes for it."

Remember that while speculators cause a short term price rise, they lower long term prices as A, they bring more supply onto the market when they sell--generally during a real shortage that would have been much worse without them, and B, it causes farmers to produce more of said food.

Don't blame the speculators--they ensure that food will be available at some price in the future. Blame the government's and their genocidal central bank policies.

When you are living on the edge of survival, or not survival, when it comes to food and water, the short term is all that matters. Tell the people who are rioting that high prices are actually good and see how far it gets you. Profiting from the rise is food prices is dirty money. That may be ok for some, but I find it hypocritical coming from one who pushes his Christianity. The Christian/starving the poor was what I was getting at.

M.E. Dominoes continue to fall as UN/US backed dictators are reshuffled to appease the Muslim masses.
Oil through 150 on to 200
Commodity prices push grocery bills to heights that Joe and Jane6 can't afford ushering in civil unrest stateside.
Dollar continues to crumble and file 13 by end of 2012.

Mother nature wildcards,
Possible large scale seismic activity.
Weather trends to colder longer winters.
Puxatony Phil dons his army helmet and watches the human cartoon from his bunker in the hills of Pennsylvania.

It's all trends baby, it's all trends and gold's the lowest common denominator!
Bank on it. The Rothies did.

Don't get it! If a Call or Put is being bought, then someone is selling; if they are being sold, then someone has to be buying. It takes a buyer and a seller to create the Put or call, period! Lots of writers seem to forget this fact.

Increasing gold reserves at the "appropriate time" is in line with the strategy of internationalizing the yuan, the report cited Xia as saying. "Related departments" should employ a "buy in the dip" strategy over a very long period of time, Xia said.